Document Details Allegations Against Intel in Korea

Intel’s antitrust troubles haven’t gotten as much attention as Microsoft’s, in large part because most evidence concerning the chip maker’s tactics remains locked up in confidential documents. But some new, unflattering details about one investigation are coming to light.

In January, the Korean Federal Trade Commission produced a 133-page public version of its findings against Intel, which it announced last June without providing many specifics. A Korean-speaking research fellow working with a non-profit advocacy group, the American Antitrust Institute, subsequently produced a 15-page translation of sections of the bigger document (which was noted this week by the Inquirer).

The excerpts lay out a series of carrots and sticks that Intel allegedly offered Samsung Electronics Co. and Sambo Computer–two big PC makers in Korea–to reduce chip purchases from rival Advanced Micro Devices Inc. and keep Intel as their main supplier. For example, the document suggests that Intel withheld rebates from Samsung in 2002 to punish it from starting to use AMD chips, later coming up with a more attractive collection of incentives that eventually led Samsung to curtail purchases from AMD.

Intel tends to characterize such as actions as conventional volume discounts, simply designed to reward companies that buy more from Intel. But at least three Samsung executives “consistently testified” that Intel “suggested rebates in exchange for abandoning” AMD chips, the document translation states.

The KFTC translation also cites documents from Intel’s Korea subsidiary, which it says describe the “main achievements” of its actions involving Samsung: “excluded a competitor–AMD, hindered AMD’s expansions in the domestic market; AMD’s decreasing awareness or reputation in the market and within Samsung; Samsung’s abandonment of AMD CPUs,” using computer-industry parlance for microprocessor chips.

The document cites similar Intel actions involving Sambo, adding that Intel also convinced Sambo not to participate in an AMD product launch event in September 2003.

Chuck Mulloy, an Intel spokesman, notes that the company has filed suit in Korea to overturn the KFTC decision. “We said that we believe there are significant legal, factual and economic issues with the findings of the KFTC,” he says. He notes that the court proceeding will involve testimony under oath, which Mulloy says was not a requirement of the KFTC investigation.

Not only that, Mulloy notes that the antitrust association’s translation amounts to picking and choosing excerpts by a group that has been no friend to Intel, and counts AMD as one of its sponsors. “The selection was done by an organization that has opposed Intel on multiple levels,” he says.

It’s certainly true that some facts could be getting lost in translation, and selection. But regulators in Japan have also found against Intel, and those in Europe have issued a statement of objections against the company; the U.S. Federal Trade Commission and state attorney general in New York are also studying the issues. And a separate document, a translation on the Korean agency’s own Web site, certainly argues that it did plenty of homework:

“In June 2005, the KFTC launched investigation into the case and it took three years of thorough investigation, data collection and debates with renowned economists and legal scholars from home and abroad before the KFTC finally made a decision.”